Jet fuel plunges, but surcharges are here to stay

Until this summer, I didn't consider a domestic flight a good deal unless it was under $100 for a one-way ticket. Since June, though, I know I'm lucky if I can find a flight anywhere that won't cost more than a mortgage payment.

A new study from USA Today shows exactly how much those prices have gone up because of fuel surcharges:
  • Los Angeles to Bangkok -- up $352 over last year's fuel surcharge with a fuel surcharge of $542
  • Washington, D.C to Tokyo -- up $400 over last year thanks to a $630 fuel surcharge
  • New York to Dublin -- up $138 over last year because of a $230 fuel surcharge

Prices jumped sharply when jet fuel prices took off and airlines were forced to increase fuel surcharges in ticket fares. But now jet fuel is down sharply, comparable to last year's prices, yet the high prices remain all across the industry. What gives?


Outraged travelers accuse airlines of greed, but the airlines argue the surcharges are still necessary. A Northwest Airlines spokesperson says that prices "continue to exceed the surcharge levels in place," adding that many existing surcharges were not in place when oil was at its record high earlier this year. Other airlines say that the surcharges they were charging when jet fuel was at its high of $4.34 per gallon in July could not keep up with the costs to the airlines, so that now even though jet fuel is down below $2.40 per gallon, they are still trying to catch up with all the costs incurred over the summer.


That's why, the airlines say, fuel surcharges are up so much. In fact, these charges are up across the board, according to research by FareCompare.com, with an average increase of 60% over last year's numbers. And despite these higher fees, the airline industry still expects to lose billions of dollars this year.

The number FareCompare crunched for USA Today include ticket prices for 75 non-stop overseas routes, and none of the major players came out looking so good to consumers: Surcharges double on one or more routes for the four major U.S. airlines since last year. The biggest increase was for Thai Airways L.A. to Bangkok route, up 185% since last year.

You can get angry and call it a money grab if you want to, but most airlines simply call it "staying in business." The good news for travelers is that costs are falling for the airlines, and they are slowly cutting some fees. So far these cuts have not amounted to much, but some industry experts expect to see a gradual but steady decline in fuel surcharges as jet fuel prices decline.

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